FREE vs. PAID: WILL NEWSPAPERS RETHINK CIRCULATION MODEL?

By: by Lucia Moses

Free-Distribution Dailies Raise Question





by Lucia Moses



Free alternative weeklies are gaining popularity with national
advertisers. Traditional newspapers are discounting subscriptions
while giving away their content on the Internet. And a small – but
growing – number of free-distribution daily papers are thriving. Are
we moving toward a universe where all news will be gratis?



Mark Guerringue, who, with his partners, has launched free dailies in
New Hampshire, believes the idea isn’t as crazy as it once was. ‘I
think the concept of free distribution doesn’t seem so foreign now,’
he says.



It’s certainly true that the industry is moving toward readership as
a measurement of reach. At the urging of publishers, the Audit Bureau
of Circulations last year rolled out its Reader Profile program, which
sets standards for readership research and audits readership studies
by newspapers.



But paid circulation is here to stay – for now. Many advertisers still
demand audited circulation figures. ‘Free’ still conjures up the image
of weeklies that are predominantly advertising vehicles.



‘There still is the association among some advertisers that ‘paid’ is
synonymous with ‘wantedness,” says John Murray, vice president of
circulation and marketing for the Newspaper Association of America (NAA).



Gregg Knowles, a former newspaper publisher who’s now a Montclair,
Calif.-based media broker, is skeptical about free dailies. ‘I think
it would be very difficult for advertisers to track how many people
are picking it up,’ he says.



Guerringue admits that some advertisers are leery of their model for
that very reason. But he and his partners say their strategy of offering
low ad rates – and keeping costs down by eliminating the circulation
department – works. ‘We make profits that are consistent with the
industry standard,’ he says.



Publishers of paid dailies, meanwhile, are reluctant to give up
circulation revenue, which generally contributes a precious one-fifth
of total revenue.



Owners of free dailies argue that while their paid competitors plow
money into retaining and adding subscribers, overall daily circulation
continues to stagnate. In addition, newspapers have been having a
tougher time raising their sales prices in recent years, according to
NAA figures.



In a white paper published in May, an NAA task force says the industry
will have to evaluate circulation’s return on investment at some point:
‘If examined, the true cost of subscriber churn will likely drive
newspapers to rethink the current model.’







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Lucia Moses (lmoses@editorandpublisher.com) is an associate editor for E&P.











(c) Copyright 2000, Editor & Publisher

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